Food and non-alcoholic beverage inflation (hereinafter referred to as food inflation for short) in South Africa continued its upward momentum in October, the Bureau of Food and Agricultural Policy (BFAP) reported in its latest report on food inflation. On a year-over-year (yoy) basis, it reached 12%, 0.2 percentage points above its previous high, in December 2016. Food inflation represented 2.1 percentage points of headline inflation for the 7-year consumer price index. .6% In month-on-month terms (mom), food inflation was 0.9%.
The food categories that registered the highest year-on-year inflation were (from highest to lowest) oil and fats (25.7%), bread and cereals (19.5%), meat (10.5%), milk and cheese, and eggs (also 10.5%), fish (10.3%), sugar and sugar-rich foods (9.8%), soft drinks (9.1%), vegetables (3.9%) and fruits (1 ,two%). In monthly terms, the food item that registered the highest inflation was fruit (4.1%), followed by milk and cheese and eggs (1.4%), while meat, fish, sugar and sugary foods, and beverages non-alcoholic registered 1%. Vegetables saw maternal deflation of 0.1% and oils and fats deflation of 1%.
“As for food, inflationary effects continue to be driven by agricultural commodities such as corn, wheat, soybeans and sunflower oil,” the BFAP noted in its report. “Local corn prices exceeded R5,000 per tonne in the third quarter of 2022 as a result [rand] weakened above R18.00 at [US dollar] and global prices continued their upward trajectory.
World prices were rising due to lower yields and quality in some northern hemisphere maize regions, signs that major cereal-producing regions in the southern hemisphere would experience a dry season again, as well as the effects of the war between Ukraine and Russia. Since grains and oilseeds are essential inputs for the production of beef and poultry, rising prices for these products had helped drive up meat prices around the world. However, beef prices had stabilized. Chicken prices continued to rise on other factors, including the worst outbreak of bird flu in the northern hemisphere.
October saw a long list of foods with year-on-year inflation above 10% in South Africa. In the order and descriptions given by the BFAP, these were vegetables (onion, bell pepper, cabbage, tomato, lettuce, spinach, beetroot, canned mixed vegetables, and various frozen vegetables); fats and oils (vegetable oils and mayonnaise), pork (ham), starchy foods (wheat flour, whole wheat bread, cornmeal, instant noodles, white bread, pasta, breakfast cereals, and baked goods); beverages (coffee, tea, and fruit juices), fruits (apples, pineapples, and oranges); beef (T-bone, corned beef, organ meats, minced meat, shoulder, brisket, stew); legumes (canned baked beans); chicken (fresh whole chicken and frozen but not individually quick frozen chicken portions); dairy (milk, gouda cheese, powdered milk and sour milk); foods high in sugar; eggs; and others (whiteners, salt, tomato sauce, powdered soup and chutney).
“High inflation for corn and wheat-based foods was cushioned by a significant deflation in rice prices,” the BFAP observed. “The high inflation of some fruits was cushioned by a significant deflation in the prices of bananas, avocados and papayas.” And the headline inflation figure for vegetables fell because some (potato, sweet potato, and cauliflower) experienced deflation, while others (broccoli, squash, cucumber, and carrot) experienced low inflation.
The cost of the BFAP Thrifty Healthy Food Basket (THFB) increased by 12.5% (or R367) YoY and 0.3% (or R10) per month to R3 298. The THFB comprised 26 items from all food groups and was designed to feed a family of two adults, one older and one younger child, for one month. Assuming that a family earns two minimum wages and benefits from child allowances and school meals, in October the THFB would have consumed 31.5% of its total income (compared to 31.4% in September).
“Our view is that food inflation will remain high for the next three months as the full effects of persistently rising commodity prices and weaker exchange rates trickle down to retail markets,” he said. the BFAP. “We expect food inflation to peak in the first quarter of 2023, after which the higher base effects seen from March 2022 will lead to smaller inflationary effects for the remainder of 2023. “.
